Fuel Quality Standards in Australia

Transcription

1 Fuel Quality Standards in Australia You Wei AW Analyst Stratas Advisors APFI Forum Sep. 13, 2017 Melbourne, Australia UPSTREAM MIDSTREAM DOWNSTREAM FUEL & TRANSPORT

2 DISCLAIMER This Presentation contains forward-looking statements, including, but not limited to, statements regarding the value and effectiveness of Stratas Advisors services, that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause Stratas Advisors results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words "predicts," "plan," "expects," "anticipates," "believes," "goal," "target," "estimate," "potential," "may," "will," "might," "could" and similar words. Stratas Advisors intends all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: risks and uncertainties inherent in our business; our ability to attract new customers and retain existing customers; our ability to effectively sell, service and support our products; our ability to manage our international operations; our ability to compete effectively; our ability to develop and introduce new products and services or enhancements to existing products; our ability to continue to promote and maintain our brand in a cost-effective manner; our ability to manage growth; our ability to attract and retain key personnel; the scope and validity of intellectual property rights applicable to our products; adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which we operate. Past performance is not necessarily indicative of future results. The forward-looking statements included in this presentation represent Stratas Advisors views as of the date of this presentation. Stratas Advisors anticipates that subsequent events and developments will cause its views to change. Stratas Advisors undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Stratas Advisors views as of any date subsequent to the date of this presentation Stratas Advisors. All rights reserved. Stratas Advisors is a trademark or registered trademark of Hart Energy Publications, LLLP in the U.S. and other countries. Other company names, product names and company logos mentioned herein are the trademarks, or registered trademarks of their owners. This material may not be published, broadcast or distributed in whole or part without express written permission of Stratas Advisors. Stratas Advisors. All rights reserved. 2

3 Who We Are Stratas Advisors is a global consulting and advisory firm that covers the full spectrum of the energy sector and closely linked industries The world s leading businesses, governments and institutions turn to us for data, analysis and insight (IOCs, NOCs, independents, energy consumers and financial entities) We help our clients achieve tangible results through informed strategic decision-making and implementation planning Key differentiators include Global coverage with deep local knowledge Integrated analysis across the entire energy value chain, including macro-level analysis (geopolitics, macro-economics, policies and regulations) Our research and consulting staff comprises some 60 professionals located on the ground in key global energy market centers Combined, our team brings over 500 years of combined energy industry expertise, including Technical (Petroleum Engineers, Geologists, Process Engineers) Economists Political Scientists Financial Analysts

4 Global Fuel Specifications Keeping up with changes in transportation fuel specifications and policies is a full-time job. We do it so you don t have to. Our fuel quality team scours myriad sources for information to provide a comprehensive view of fuel markets in 150-plus countries. You can rely on our expert guidance for help with: Regulatory compliance: Understand the framework for your operations Strategic planning: Identify opportunities and challenges stemming from policy changes Capex planning: Position resources to gain advantages Competitive assessments: Know what your rivals know Supplementing in-house databases and analyses What You Get Access to an extensive and frequently updated database of fuel specifications for 150-plus countries and a wide range of fuels: gasoline, diesel, ethanol blends, biodiesel blends, ethanol, biodiesel, butanol, CNG, LNG, LPG, DME, methanol, methanol blends, marine, jet, kerosene, fuel oil, additives Regular updates and analysis on regulatory and policy changes that drive fuel specs and emission standards; includes assessments of emissions related to transportation (marine, road, air) and fuel efficiencies Impacts of climate and air quality issues on transportation fuel quality Interactive webinars Direct access to our analysts Worldwide Fuel Specifications Book Access to our analysts' maps and presentations from industry conferences Available as an add-on: Analysis of fuel additives Stratas Advisors. All rights reserved. 4

5 Agenda Global Overview Independent Study on Australian Fuel Quality Standards Gasoline Quality Trends On-Road Diesel Quality Trends Outlook for Vehicle Emission Standards Part 2 of Presentation by Dr. David Swanton, Director of Fuel Quality Standards Section, Department of the Environment and Energy Stratas Advisors. All rights reserved. 5

6 Global Overview

7 Global Overview Regulatory developments occurring globally for sulfur, octane and cetane Overall Gasoline: Regulatory activity focuses on sulfur, octane and to a lesser extent, benzene, aromatics and olefins On-Road Diesel: Regulatory activity focuses on sulfur, cetane and to a lesser extent, density, lubricity, polyaromatics and cold flow Sulfur Worldwide limits range widely from 10 ppm to 3,500 ppm for gasoline and 10 ppm to 10,000 ppm for on-road diesel Several countries to reduce sulfur to 10 ppm or 50 ppm in the next 5-10 years A number of countries plan to leapfrog from very high sulfur limits to very low ones (e.g. Peru, Saudi Arabia) On the other hand, larger countries follow the traditional route of reducing first to 150/350 ppm, then 50 ppm and eventually 10 ppm (e.g. China, India, Russia) Octane Emerging issue with sulfur reduction being implemented MTBE and ethanol are most common enhancers Cetane Most common cetane number is set at a minimum of 51, while the most common limits for cetane index range between 43 and 46 Vehicle Emissions New emission standards ranging from Euro 3/III to 6/VI to be implemented in the next 5 years Stratas Advisors. All rights reserved. 7

8 Independent Study on Australian Fuel Quality Standards

9 International Fuel Quality Standards and their Implications for Australian Standards Background report for the 2015 Review of the Fuel Quality Standards Act 2000 Preliminary study comparing Australian fuel standards against fuel standards of EU, Japan, South Korea and the U.S. on: Points of difference Approach in formulating fuel standards Examined fuel standards of gasoline, diesel, autogas (LPG), biodiesel and E85 Suggested alignment of certain fuel quality parameters based on best practices* including: Gasoline: Sulfur: Align with EU, Japan and South Korea (10 ppm max) to enable advanced emission control systems Aromatics: Align with EU (35 vol% max) to reduce NOx, benzene and PM emissions Diesel: Polyaromatics: Align with EU (8 wt% max) to reduce NOx and PM emissions Carbon residue 10%: Align with the U.S. and South Korea (0.15 wt% max) to reduce engine deposits Publicly available at Note: *The study did NOT carry out cost-benefit analysis of implementing new fuel quality standards. Stratas Advisors. All rights reserved. 9

10 Gasoline Quality Trends Sulfur, Aromatics, Octane

11 Top 100 Gasoline Sulfur Ranking Australia currently ranks at no. 70 based on legislated sulfur limits Source: Stratas Advisors, May 2017 Stratas Advisors. All rights reserved. 11

12 Maximum Sulfur Limits in Gasoline, 2017 Armenia, China, Georgia, Macau and the U.S. required 10 ppm since January ppm ppm ppm ppm ppm ppm Not regulated/ No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 12 Countries may apply lower limits for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at

13 Maximum Sulfur Limits in Gasoline, 2020 India, New Zealand and several CIS countries to require 10 ppm by this time 0-10 ppm ppm ppm ppm ppm ppm Stratas Advisors. All rights reserved. 13 Countries may apply lower limits for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at Not regulated/ No information Source: Stratas Advisors, August 2017

14 Maximum Sulfur Limits in Gasoline, 2025 Malaysia, Thailand and Vietnam to require 10 ppm by this time 0-10 ppm ppm ppm ppm ppm ppm Stratas Advisors. All rights reserved. 14 Countries may apply lower limits for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at Not regulated/ No information Source: Stratas Advisors, August 2017

15 Maximum Aromatics Limits in Gasoline, 2017 South Korea sets the strictest aromatics limit at 22 vol% max 25 vol% vol% vol% vol% >45 vol% Not regulated No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 15 Countries may apply lower limits or no limit for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at

16 Maximum Aromatics Limits in Gasoline, 2020 China to require 35 vol% max while Mexico plans to implement 25 vol% max by this time 25 vol% vol% vol% vol% >45 vol% Not regulated No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 16 Countries may apply lower limits or no limit for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at

17 Current Primary Market Octane Grade in Countries Expecting Fuel Economy Changes in 2020 Initial analysis suggests that octane levels may not be enough to meet automaker needs in coming years 91.8% 86.2% 99.3% (EU avg.) 85% 89% 78% 65% 99.9% 99% RON 99% 92 RON 68.9% 91 RON 90 RON 87 AKI Market share of the primary octane grade is shown in %. Primary market octane grade refers to the most commonly consumed gasoline grade in the country. Vietnam also plans to implement fuel economy standards in this timeframe but the octane market split is unclear. Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 17

18 On-Road Diesel Quality Trends Sulfur, Polyaromatics

19 Top 100 Diesel Sulfur Ranking Australia ranks among the top countries having implemented 10 ppm sulfur diesel since 2009 Source: Stratas Advisors, March 2017 Stratas Advisors. All rights reserved. 19

20 Maximum Sulfur Limits in On-Road Diesel, 2017 China and Macau implemented 10 ppm since January ppm ppm ppm ppm ppm ppm Not regulated/ No information Countries may apply lower limits for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 20

21 Maximum Sulfur Limits in On-Road Diesel, 2020 India, Ecuador, Malaysia and Ukraine moving to 10 ppm by this time ppm ppm ppm ppm ppm ppm Not regulated/ No information Countries may apply lower limits for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 21

22 Maximum Sulfur Limits in On-Road Diesel, 2025 Thailand and Vietnam to require 10 ppm by this time ppm ppm ppm ppm ppm ppm Not regulated/ No information Countries may apply lower limits for different grades, regions/cities, or based on average content. Detailed information on limits and regulations can be found at Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 22

23 Max Polyaromatics Limits in On-Road Diesel, 2017 Only Europe and parts of CIS and Asia Pacific regulate polyaromatics 5 wt% 8 wt% 11 wt% Not regulated May be set independent of sulfur limits. Detailed information on limits and regulations can be found at No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 23

24 Max Total Aromatics Limits in On-Road Diesel, 2017 Instead of regulating polyaromatics, U.S. regulates total aromatics at 35 vol% max 0-15 vol% vol% vol% vol% Not regulated No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 24

25 Max Polyaromatics Limits in On-Road Diesel, 2020 China, India and South Africa to tighten polyaromatics limits to 8 wt% max or below 5 wt% 7 wt% 8 wt% 11 wt% Not regulated May be set independent of sulfur limits. Detailed information on limits and regulations can be found at No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 25

26 Max Polyaromatics Limits in On-Road Diesel, 2025 Malaysia to require polyaromatics limits of 8 wt% max by this time 5 wt% 7 wt% 8 wt% 11 wt% Not regulated May be set independent of sulfur limits. Detailed information on limits and regulations can be found at No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 26

27 Outlook for Vehicle Emission Standards Gasoline Vehicles

28 Gap between Current Vehicle Emission Standards and Gasoline Quality Gaps in Australia, South Africa and parts of the CIS, Middle East and Latin America Emission standards do not match fuel standards Emission standards match fuel standards No emission standards No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 28

29 Emission Requirements for New Gasoline Vehicles, 2020 India to join top markets in requiring stringent standards by this time STRINGENT (Euro 5-6; US Tier 3; California LEV III; Japanese standards) LESS STRINGENT (Pre-Euro; Euro 1-4; US Tier 0-2; California LEV II) Not regulated No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 29

30 Outlook for Vehicle Emission Standards Diesel Vehicles

31 Gap between Current Vehicle Emission Standards and On- Road Diesel Quality Gaps in Latin America and parts of Asia, CIS and Middle East Emission standards do not match fuel standards Emission standards match fuel standards No emission standards No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 31

32 Emission Requirements for New On-Road Diesel Vehicles, 2020 India to join top markets in requiring stringent standards by this time STRINGENT (Euro 5/V and 6/VI; U.S. Federal; Japanese standards) LESS STRINGENT (Pre-Euro, Euro 1/I to 4/IV) Not regulated No information Source: Stratas Advisors, August 2017 Stratas Advisors. All rights reserved. 32

33 Part 2 of Presentation by Dr. David Swanton, Director of Fuel Quality Standards Section, Department of the Environment and Energy